FG Adopts Private Sector Partner Financing For Refineries' Refurbishment *Says Inadequate Port Handling Facilities Cost N1.34tr Through Demurrage Yearly

PIX: Minister of State for Petroleum Resources, Ibe Kachikwu

Minister of State for Petroleum Resources, Ibe Kachikwu


The Federal Government is expected to save about N4.69 trillion yearly from massive importation of petroleum products, as it plans to become a net exporter by end of 2019, according to statistics released by the Federal Ministry of Petroleum Resources.

Besides, the Ministry, which said that no financiers have been selected for the rehabilitation of refineries in the country, disclosed that government plans to formally engage a pool of financiers after cost estimates have been firmed up this June.

The ministry said that 20 million metric tonnes of Premium Motor Spirit (PMS) also know as petrol valued at N3.35 trillion was imported into Nigeria from January to December 2016.

It added that the country spent N1.34 trillion yearly due to shipping and demurrage caused by inadequate port receipt facilities, as indicated in a document detailing Federal Government’s plans to rehabilitate the refineries on Wednesday, made available by the Ministry.

It said the refineries initiative,  Big Win 4, seeks to change the current landscape of domestic refining in Nigeria, by setting a target to exit product importation by year-end 2019, adding that this will be achieved through a new strategy that addresses operational and developmental challenges.

The document also indicated that the ministry has concluded arrangement to refurbish the refineries to name plate capacity through the injection of private sector partner financing.

The ministry added that the enabling environment would be created for the establishment of private sector-led greenfield and modular refineries.

Clarifying on the rehabilitation of Nigeria’s refineries, the ministry said the tender process was truncated in May 2016, following concerns raised by the National Assembly and Bureau of Public Enterprises (BPE).

It disclosed that the Nigerian National Petroleum Corporation (NNPC) engaged BPE and secured alignment to ensure that rehabilitation process would not adversely impact any future Federal Government privatization initiative.

Received bids were analysed and winners for Port Harcourt Refinery Company (PHRC), and Warri Refinery Company (WRPC) were identified.

Currently, the status of existing licenses is being reviewed. General requirements and guidance information for licensing of new refineries have been developed by Ministry of Petroleum Resources to ensure transparency and sanity in the process.

Federal Government led efforts to eliminate illegal refineries in the Niger Delta region seeks to promote socio-economic development, create jobs through collaboration with states, communities and private sector.”

The Minister of State for Petroleum Resources, Ibe Kachikwu, said in a video podcast on Wednesday that NNPC has taken up the responsibility of a last-resort importer producing petroleum products in an unstable environment as prices continue to take a big hit.

“The country target is to cease the importation of petroleum products by 2019 and get advantages in terms of foreign exchange conservation, job creation and stabilise the market place in terms of pricing.

“On our refineries, we are currently seeking financing, and not concession nor sale of the refineries for it is absolutely important to do whatever is needful in order to get the country’s refineries upgraded, enhanced, and get the greenfield refinery builders supported, and especially get any individual to co-location refinery ownership interest,” Kachikwu added.